Labor Party Chairman Amir Peretz announced Wednesday that he opposes bringing MK Avigdor Lieberman's Yisrael Beiteinu Party into the coalition, but that did not appear to dent Prime Minister Ehud Olmert's determination to try to broaden the coalition and thereby increase his government's stability.

Olmert's aides made it clear Wednesday night that they intend to continue talking with Lieberman with the aim of bringing him into the coalition, and blamed rebels in the Labor Party for forcing Olmert's hand with their lack of coalition discipline.

During a tense meeting between Olmert and Defense Minister Peretz Wednesday, the Labor leader told the prime minister that most Labor MKs oppose Lieberman's inclusion in the government.

However, Olmert told Peretz that if Lieberman did join the coalition, there would be no change in the government's guidelines, nor would Labor's ministries be reshuffled. Therefore, he argued, Labor has no reason to oppose Lieberman.

The prime minister also reminded Peretz that during the April coalition talks, the two agreed that no Zionist party would be ruled out as long as it accepted the government's guidelines.

But Peretz told Olmert that he could not "see a coalition that includes Yisrael Beiteinu. It is not a matter of the rejection of an individual, but of an entirely different worldview on all issues."

He added that he believed that it would be possible to reinforce the existing coalition without much effort.

"How does he think we can reinforce the coalition?" responded an Olmert aide. "It is no secret that the prime minister is not pleased with the Labor Party. If the coalition were stable, it would be a different story. Amir Peretz must understand that [MK] Shelly Yachimovich and the Labor rebels are the ones who brought Lieberman."

Peretz, added the aide, "is unable to bring 19 votes [the number of Labor MKs]. It [Labor] is not a party, it is a militia. So what is the prime minister supposed to do? Go down with them?"

Notwithstanding the tension that prevails in relations between Olmert and Peretz, aides to both leaders stressed that there is no coalition crisis. However, they added, this dispute could yet generate one.

Sources close to Peretz said that since an agreement with Lieberman has still not matured, there is no room to talk of a crisis; Peretz merely announced his intentions.

Olmert aides said that they are not bothered by Peretz's opposition to Lieberman joining the coalition, because Lieberman will have to accept the existing government guidelines. They also noted that Peretz agreed to such a coalition expansion during negotiations on the formation of the government in April.

Peretz intends to hold a meeting of Labor's Knesset faction on Sunday to discuss Olmert's plans to bring Lieberman into the coalition, as well as the Yisrael Beiteinu chairman's proposal for changing the system of government from a parliamentary to a presidential one.

Peretz plans to voice his views on both Lieberman and the idea of changing the system of government, following a long silence that has sparked criticism from within his party of his alleged weak leadership. Sources close to Peretz said that he is opposed to changing the system of government to a presidential one.

MK Danny Yatom, one of the Labor Party "rebels," described Peretz's failure to speak out against Olmert's decision to offer Lieberman a spot in the coalition without consulting with him as "very serious."

"I have argued for some time now that the Labor Party lacks leadership," Yatom said.

Labor's faction chairman, MK Ephraim Sneh, described Olmert's offer to Lieberman a "slap in the face of Arab Israelis and democracy. Lieberman poses a threat to Arab citizens. Olmert should explain to me how his declarations about equality for all citizens fit with Lieberman joining the coalition."

Lieberman supports transferring Arab Israeli towns to the Palestinian Authority as part of peace deal, as well as stripping citizenship from individual Arabs who, he says, function as a "fifth column." He has also spoken of instituting the death penalty for Arab MKs who, he alleges, have committed treason.

Olmert meets Shalom, without Netanyahu's knowledgeOlmert met Wednesday with Likud MK Silvan Shalom to discuss, among other things, the suggestion to change the system of government.

Shalom said that that he is opposed to changing the current system, while Olmert made it clear that Kadima would support the motion in its preliminary hearing in the Knesset.

It is unclear whether the meeting had anything to do with the Prime Minister's recent statements regarding his desire to expand the coalition.

Sources from Likud Chairman Netanyahu's inner circle expressed their vexation over the meeting and said that it is improper for an opposition MK to meet with the PM independently.

In reaction, Shalom said that he does not need anyone's approval inorder to meet with the Prime Minister. He rejected the criticism over the meeting as "childish, petty and stupid."

According to Shalom, the meeting touched on political matters, but revolved around pressing national issues such as the threat posed by North Korea and Iran.

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